Benefit Corps, a New Kind of Company

For-profit corporations have become known over the past two decades
for layoffs, outsourcing, and determination to maximize profits for
investors—no matter the cost to employees, consumers, or the economy.
But such practices may be waning: States across the U.S. are
considering laws to enable entrepreneurs to create corporations that do
as much for society as they do for their shareholders.

Maryland was the first state to pass Benefit Corporations
(“B-Corps”) legislation. Co-sponsored by State Senators Jamie Raskin
and Brian Frosh and Delegate Brian Feldman, the law, which went into
effect in October 2010, creates a new class of corporation committed to
having a positive impact on the environment and society. Vermont and
New York passed similar legislation in June. Legislators in other
states, including California, Colorado, North Carolina, Oregon,
Pennsylvania, and Washington, are considering the issue.

Businesses incorporated under B-Corps laws have social goals and
commitments written into company bylaws. This ensures that companies
will no longer face the hard choice of sacrificing their socially
beneficial goals in order to fulfill their responsibility to investors
when, for example, an acquisition offer is on the table. Under
traditional corporate law, company heads can’t refuse such an offer for
fear of a lawsuit from shareholders.

“There have been a number of socially conscious companies that have
been forced to sell out to large corporations and end up sacrificing
the public side of the equation,” explains Raskin. “Ben & Jerry’s
is an excellent example. The directors of the corporation were required
to accept a handsome buyout offer even though they knew the business
would lose its soul.”

B-Corps may choose any goals that will have a measurable “general
public benefit.” They can go totally “green,” offer worker training or
literacy programs, or host activities that promote the arts and
sciences. Companies incorporated under the law will have to submit an
annual report detailing not only their finances but also their good
works.

According to Sean Smeeton, president of Taharka Brothers, the law is
just the right match for his Baltimore-based ice cream company. The
company works to dispel misperceptions about young men from Baltimore’s
underserved communities, while helping them gain work experience,
leadership skills, and the opportunity to become stockholders in
Taharka Brothers.

“The Benefit Corp movement should bring a change in mindset to the
business world and entrepreneurs,” says Smeeton. “The two will be able
to acknowledge the vital role business can play in making the world a
better place.” —Walaika Haskins

ALSO…

According to a poll by 60 Minutes and Vanity Fair, most Americans want to protect Social Security.

To balance the U.S. budget, 61 percent favored taxing the rich, 20
percent chose cutting military spending, and only three percent were
for cutting Social Security.